There are a range of reasons why people choose to pursue a finance option, from sudden emergencies and surprise bills, to long-term luxury purchases like cars and homes. Finance from lenders gives us the chance to obtain the money we want or need at the push of a button – but for those people that aren’t able to secure finance, they can often be left asking “why can’t I get a loan?”.
Indeed, said button pushing can sometimes be met with a harsh decline. It can be a bleak reality to face, but, if your credit rating isn’t attractive to lenders, securing a loan can be difficult. Below, we’ve outlined 7 steps you can start taking today to turn your credit rating around and have it looking more handsome than ever.
Why can’t I get a loan? Check your details!
It might sound silly, but loans are refused daily due to the wrong information being included in the application form. Before sending your application, ensure you’ve given accurate contact details and have fully disclosed any vital information about your finances. If you’ve recently changed your address or name, you must notify the lender prior to requesting a new application. If you do fail to provide the wrong information, it’s likely your credit score will be hurt as a result.
Make late payments a thing of the past
Making late or even missing payments should be the first bad habit you cut out if you’re trying to improve your standing with loan providers. Lenders are much less likely to approve an application if you have a history of going AWOL on your payments, as they’ll have less confidence that you’ll be able to meet them successfully in future.
The best and most simple way to prevent this happening is to only lend money that you have the means to pay back. That way, you’ll prevent a hit to your credit rating when you default on a payment you were never able to make in the first place. Of course, lenders have measures in place to ensure you can’t massively overborrow, but you should still always do a thorough review of your personal finances before going ahead with an application.
Measure needs against wants
Be smart with your spending by only making purchase decisions you can actually afford. For example, the latest smartphone isn’t a necessity, but your energy bills are – so if you do need a new phone, consider buying a second-hand older model and opt for an affordable, SIM-only network. When reviewing the options available for a finance contract, it could be worth going for one that extends repayments over a longer period – as although you may pay back more overall due to interest, the monthly payments will be lower and therefore more affordable.
Cut costs where possible, too. Usually catch the bus to work? Consider riding a bike instead. If you’ve got an expensive gym membership that covers classes you don’t attend, switch to a gym that only charges for what you need or consider taking part in free forms of exercise. If you’ve been refused car finance or finance for another big spend, don’t feel disheartened. Question if a particular model is really vital to your life and begin to widen your scope of options to second-hand or older models. You may even find something you prefer more at a fraction of the price!
Tie up loose ends
If you have any former mobile contracts, store credit or credit cards that aren’t in use still linked to your bank account, your credit rating could be suffering as a result. Take the time to contact the various network providers, retailers, and banks whom your name and account details are linked to and request that they close the accounts.
This is a great step to take before you begin to consider loans for people with bad credit. Your credit rating may be stronger than you first thought, it might just need a little spring cleaning.
Don’t apply here, there and everywhere
While being denied credit doesn’t impact your credit score, applying does. Each time you apply for credit, your rating is ever so slightly affected. By embarking on multiple credit applications, you may luck out and have an application accepted but, unfortunately, those other attempts – failed or otherwise – might place a short-term indentation on your credit rating.
To stop this from happening, try and apply for one loan at a time rather than many at once, waiting until you’ve heard back from one lender before applying with another. While you may think applying to more than one at at a time will improve your overall chance of success, you could actually do more harm than good when it comes to your credit rating.
Pick your social opportunities
Fear of missing out isn’t new. We all want to be present at social events and gatherings, and the idea of having to pass up can seem scary – who wouldn’t want to be having fun with friends rather than alone watching Netflix?
It doesn’t have to be that way, though. Carefully curate your socialising and you’ll find yourself valuing your money more and even having a better time. For example, try inviting people over for dinner instead of dining out, or, if you can’t resist chef-made food, swapping the steak and premium lager for a pasta and soft drink – both your body and your bank balance will thank you in the morning!
Sign your name on the electoral roll
This is a simple but worthwhile step in recovering your credit rating. By adding your name and address to the electoral roll, you’re giving creditors clear evidence of your home address – which gives them that little bit more confidence and improves your credit rating as a result. And, of course, if you’d prefer to abstain from voting, there’s no obligation to do so – even if you’re registered on the electoral roll.
Remember, a poor credit rating isn’t for life – it can be undone. Part of the challenge to getting back on track is mustering your willpower and mastering careful spending habits until you’re out of the red and back in the black. With our tips, we hope you’ll be well on your way to healing your credit rating so you can secure finance easier in the future.
For more tips on saving, budgeting and debt control, be sure to check out the range of posts on the Jolly Good Loans blog.